Forward Rate Agreement (FRA)

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An over-the-counter contract between parties that determines the speed of interest, or the currency charge per unit, to be paid or received on Associate in Nursing obligation starting at a future begin date. The contract can verify the rates to be used beside the termination date and notional price. On this kind of agreement, it's solely the differential that's paid on the notional quantity of the contract. additionally referred to as a "future rate agreement".